USA! USA! USA!

The US Dollar finally got a bit of relief from the other majors today after yesterday’s record-breaking highs. The EUR/USD slid back to hover near the 1.3600 level after hitting the 1.3664 less than 24 hours ago. Across the pond, the Pound lost a bit of momentum and fell 140 points to its current 1.9911 level. Part of the reason for this correction is this Friday’s GDP report, which is expected to print at 1.5% for the first quarter and has many traders squaring their positions ahead of time. Gross Domestic Product is the broadest measure of economic activity and a large forex mover. Annualized quarterly percent changes in GDP reflect the growth rate of total economic output and the figures can be quite volatile from quarter to quarter – inventory and net export swings in particular can produce significant volatility in GDP. The final sales figure, which excludes inventories, can sometimes be helpful in identifying underlying growth trends as inventories represent unsold goods, and a large inventory increase will boost GDP but might be indicative of weakness rather than strength. Additional indicators out of the US include the Employment Cost Index and the University of Michigan Consumer Sentiment Index. With such a large amount of economic data hitting the market, expect to see large swings and a decent amount of movement. Finishing out the majors, the AUD/USD declined to .8261 and the NZD/USD hit a .7386 – its lowest level in about a week.